27 June 2009

Originally proposed by Finnish neuroscientistAnttiRevonsuo, this clever evolutionary theory holds that dreaming serves a biologically adaptive function because it allowed our ancestors to simulate problem-solving strategies for genuine, waking life threats. Antonio Zadra, Sophie Desjardins, and Eric Marcotte of the University of Montreal neatly summarize the central argument of the theory this way: “By giving rise to a full-scale hallucinatory world of subjective experience during sleep, the dream production mechanism provides an ideal and safe environment for such sustained practice by selecting threatening waking events and simulating them repeatedly in various combinations.” What we should see in contemporary dreams, argues Revonsuo, are “threat scripts” depicting primitive themes of danger that would likely have been relevant in the ancestral environment, such as being chased, falling and so on. Dreaming of Nonsense: The Evolutionary Enigma of Dream Content, 'Scientific American', 25 June

Could the benefits of testing alternative scenarios outweigh the costs, in terms of a brain that's more active than you'd think it needs to be? It's plausible, if unprovable. But it's a fact that whether we are conscious of it or not, much of our individual decision-making relies heavily on trial and error. Real life is messy, in the sense that there often are too many variables and time lags to to relate unequivocally cause and effect.

Unfortunately, in handing our social and environmental problems to large organizations, like governments, we are effectively making the very large assumption that the causes of our problems can be fixed with a minimum of trial and error. That's because large monopolistic organizations just do not do trial and error: they have their own ideas about how to go about things, often dictated by ideology or, more likely these days, by corporate interests and campaign funders, but either way, immune from competition from alternatives. So failed experiments are never terminated, while ordinary people's coping mechanisms are undermined.

All of which is not to say that government shouldn't get involved in solving our social and environmental problems. There are some things that only governments do, and that they can do well. One such is raising the revenue to tackle our problems; the other would be to articulate these problems in the first place. But the efficientachievementof our targeted outcomes requires the sort of trial and error, and the continual selection of only the best method; and that is something that governments are too big, too monolithic and too unmotivated to do. And that's where Social Policy Bonds enter the picture. Under a bond regime trial and error - essential at the societal as well as the individual level - operates automatically to select the most efficient projects and programmes. Failures are swiftly terminated. And this happens because society's targeted goals are exactly the same as those who invest in the bonds who bear the risks of failure while society benefits from their success.

24 June 2009

'The Rwanda genocide unfolded at the same time as the elections marking the transition to a post-apartheid South Africa—during the first half of 1994. At a meeting of African intellectuals called in Arusha later that year to reflect on the lessons of Rwanda, I pointed out that if we had been told a decade earlier that there would be reconciliation in one country and genocide in another, none of us could have been expected to identify the locations correctly—for the simple reason that 1984 was the year of reconciliation in Rwanda and repression in the townships of South Africa. Indeed, as subsequent events showed, there was nothing inevitable about either genocide in Rwanda or reconciliation in South Africa.'

Mr Blattman goes on to ask:

I’m only a few pages into MahmoodMamdani’s Saviours and Survivors, but I’m immensely enjoying it already. ... The book is Mamdani’s broadside against the tide of Darfur advocacy movements in the US. The academic in me loves Mamdani’s basic point: politics, like life, is complex. Boiling the Darfur conflict down to a slogan and popular campaign is at best naive, and is probably doing a disservice to peace and stability itself. The problem as I see it: simple messages, credos for action, and the call to "save" Africans will always mobilize more attention and enthusiasm than "Well, on the one hand...". Are we ...doomed to obscurity by our monotony and evenhandedness?

I think the answer is 'yes', but obscurity need not mean ineffectiveness. It probably does when there's a strong correlation between spending and results, but that doesn't always apply. Indeed, some conflicts, particularly in the Middle East, would probably benefit hugely from obscurity to the point of being invisible to the outside world. Complex issues are rarely amenable to the solutions available to large single organizations, like governments. Such organizations just are not responsive enough either to local variations, to information flows, to new technology, or to events on the ground.

Where governments, or supranational organizations like the United Nations could help is in funding the achievement of objectives by, for instance, issuing Social Policy Bonds. Preventing or ending conflict in Darfur or anywhere will probably require a mosaic of diverse, responsive projects, policies and initiatives. Social Policy Bonds would motivate investors to explore and implement these and, importantly, to terminate those that don't perform.

By issuing Social Policy Bonds governments, or the UN, or any group of interested philanthropists could fund a complex array of solutions to the conflict they target, even if they cannot anticipate what these solutions shall be. For more on this, see my essay on Conflict Reduction Bonds.

21 June 2009

For anyone who genuinely wants to quit smoking, an Easyway session can be both an enlightening and exhilarating experience. For an observer, especially a non-smoker, it must be as interesting as reading the instructions for assembling a model aircraft kit, without have the slightest intention of actually putting the contraption together. After sitting through four four-hour sessions, [Dr] Judith [Mackay, Director of the Asian Consultancy on Tobacco Control and anti-smoking campaigner] had to admit that she could not fathom how the method works. Not knowing the answer to this question has never bothered me.... Allen Carr, Packing it in the Easy Way (page 237)

There are large, important areas of individual life where even after we have achieved something, we find it difficult to articulate how we did it. Mr Carr's Easyway method was successfully followed by millions of smokers who wanted to quit, but Mr Carr found it impossible to explain how it works.

Doing the right thing so often is the result of behaviour that cannot be codified, even by an individual practitioner. How then can we devise institutional arrangements that will ensure, for example, that a catastrophic nuclear exchange will not take place, that we can avoid environmental calamity, or that children shall not die of malnutrition or malaria in their millions? I think it can be done, but only in retrospect. Allow experimentation, and in particular the termination of failed approaches, so that only the successes are widely applied. But for that to happen, we need to start with an array of diverse approaches.

So it's unfortunate that those the organizations to whom we look for solutions to our most important social and environmental problems are large enough to be immune from extinction if they fail: I refer to national governments and supra-national bodies such as the United Nations. Particularly when it comes to global challenges, they function as monopolies, insofar as they crowd out diverse approaches even if they do not actively stifle them.

Something like Easyway - successful, but impossible to codify - would never be considered by a government body. Tried, tested and failed approaches will always be preferred to something that by its success and its non-compliance with codified procedures threatens existing organizations' over-arching goal of self-perpetuation.

That's where Social Policy Bonds could help. Under a bond regime our existing monopolistic bodies - national governments - could still have roles to play: articulating society's concerns, and raising the revenue for their achievement. These are crucial roles, and the monopoly powers of government mean that only they can do them effectively. But under a bond regime the actual achievement of social and environmental goals would be contracted out to the private sector. Bondholders would have incentives to investigate and explore diverse approaches, and there would be no safety net for failures. Success in achieving social goals efficiently would be the sole criterion for a particular policy approach. In such a way could we bypass the stultifying barriers to successful new approaches imposed, consciously or not, by government, with its monopoly powers and insistence on codifiable, tested methods.

19 June 2009

[The UK public sector's] inefficiency will not be overcome any time soon. This is not to counterpose the state to the market, but rather to say that there are states which are weak or strong, smart or stupid. We are good at recognising failed states in Africa, but not so good at noticing the failed states closer to home. Similarly, markets are by no means always robust and there are some in major need of overhaul. What we need, and this is something we can all help to bring about, is a state with new policies that are more worthy of the twenty-first century and which is better able to meet our needs. We do need a state that can contain the most destructive effects of the global crisis, but we mustn’t think for one second that the state can save the economy. That is because we shouldn’t be trying to save the economy – we should be restructuring it. 'Spiked', 18 June

I'm not sure what Mr Furedi means by 'we' here. I'm more sure that any conscious effort at restructuring is unlikely to be fruitful and quite likely to be disastrous. Society is a complex as an ecology and if the economic history of the past 100 years teaches us anything it's that central planning and picking winners fail even in their own terms. And that strenuous, government-backed efforts in economics usually concentrate on one or two specific variables - with Mao Tse-Tung it was steel production or sparrow destruction; with most governments now it is economic growth - at the expense of everything else, including human wellbeing.

So I for one am wary of vague efforts calling for the sort of reform that can be carried out only by government and its agents. I'd rephrase Mr Furedi's last sentence to say: 'we shouldn't be trying to save the economy - it should be refocused so that it supplies broad social and environmental goals'. Government does have an indispensable role to play and those are in doing what only it can: articulating society's concerns, and raising the revenue to finance their achievement. Where government fails is when it detaches itself from society, and tries to achieve goals itself. Part of the reason for its failure is that it's not subject to the efficiencies of a competitive market. In particular, it doesn't terminate failed experiments. Any monopoly, whether private or public sector, stifles diversity and the variant approaches to which it gives rise. We need diverse, adaptive projects and programmes, focused toward achieving our broad social and environmental outcomes.

Social Policy Bonds are a means whereby this sort of restructuring could come about. Under a bond regime, government would do what it's good at doing: setting social and environmental target, while investors in the bonds would do what the private sector is good at doing: exploring, investigating and implementing an array of approaches, responsive to events and specific to regional variations, all in the service of the overall goal. Their rewards would be inextricably linked to their success in bringing about society's wishes, as articulated by government. Only then would efficiency in the fulfilment of social goals, almost a forgotten concept in government circles these days, be maximised.

18 June 2009

The Social Policy Bonds website is up and running again. It's not the most visually innovative site, but it does the job. It will probably need some tweaking, which I intend to do over the next few days.

16 June 2009

Though I try to look after myself, eating carefully and going to the gym frequently etc, I now doubt whether Social Policy Bonds will be issued within my lifetime. But, quite apart from the potential of cryonics, I take heart that at least one of the principles underlying the bonds is entering the mainstream; and that is the much deeper thinking about the social and environmental outcomes we want to see. Away from the mainstream media anyway, there is greater clarity about the conflicts between vague, implicit or unstated policy goals and these outcomes. For instance, transport is being seen more and more not as an end in itself, but as a as means to various other ends - with which it might be in conflict. A large part of the problem is that many of the outcomes we want to see are less easily quantified than traffic flow figures and the like, so they fall through the cracks in our highly centralised bureaucracies. John Adams is perfectly aware of these ends, and thinks that as well as asking:

Would you like to live in the sort of world that would result if everyone’s wish were granted? Assistance with the answer might be given by rephrasing the question - would you like to live in a dangerous, ugly, bleak, crime-ridden, alienated, anonymous, undemocratic, socially polarized, fume-filled greenhouse threatened by terrorism without precedent?

Quite so. We need absolute clarity about the ends of all social and environmental policy. There might have been strongly causal relationships between means (road links, for example) and ends (more wellbeing) in the past, or at certain stages of societal development, but that doesn't mean they will always apply. Or, as Mr Adams puts it, in relation to transport:

To question the benefits of hypermobility is not to deny freedom and choice. It is to ask people what it is that they really, really want, and to confront them with the fact that their choices have consequences beyond the primary objects of their desires.

14 June 2009

Diminishing numbers of people voting; a disdain for incumbent parties; a disenchantment with existing politics...the results of the recent European Union elections just reinforce what we already know and feel: the widening gap between politicians and the people they are supposed to represent. The British Members of Parliament expenses scandal adds piquancy to the mix. The centralising of government and its continued accretion of powers great and small are reaching their logical conclusion: an almost complete detachment of politics from ordinary people. Apathy and resentment - and the possible rise of extremist parties - are an almost inevitable result. It's particularly unfortunate now, when humanity's challenges are so urgent, and so demanding of a consensus and social cohesion that are rapidly disappearing.

I don't think we can continue along these lines, and see a necessary, painful transition to a new sort of politics. But what will be the result? Here are some possibilities:

1. A benign authoritarianism, Singapore-style. A corporatist-style government : freedoms are sacrificed to economic growth, punishments for misdemeanours are harsh, parliament is a rubber-stamp, and any political opposition is only token. Social cohesion is enforced and synthetic. Society and the environment are managed. The big advantage is that the streets are safe and with smart people at the top, the system works well in its own terms.

2. The US model, but without the economic growth that sustained it. Something along South African lines, where people retreat into their own communities; intra-community relationships are tense; anybody who can afford it lives in a gated suburb.

Neither model is attractive to those used to the western way of doing things. And that's where Social Policy Bonds, or something like them, could enter the picture. Currently politicians form a separate caste, and political debate centres on arcane spending and legal decisionswith all the opportunities that presents for conscious corruption or the massive over-representation of special interest groups. Under a Social Policy Bond regime political goals would be expressed in terms of outcomes that are meaningful to ordinary people. Government funds would be exactly congruent with the achievement of social and environmental outcomes. Risks of underperformance and failure would be borne by the private sector, rather than taxpayers. Goals would command a wide consensus, being of broad appeal. There wouldn't be the destructive, corrosive and ultimately distracting arguments about who should provide various socially beneficial goods and services. Instead there would be a strong emphasis on efficiency, and one that would arise naturally by the workings of a free market in Social Policy Bonds.

People understand outcomes, and there would be greater public participation in which goals shall be targeted. Such participation is an end in itself, and could be worth even more than the efficiency benefits that, in my view, a Social Policy Bond regime would generate. At a time when the current system appears to be disintegrating, and the alternatives seem unattractive or repellent, Social Policy Bonds, with their focus on meaningful outcomes and consensual goals, would bring something absolutely critical to policymaking and something that is fast running out. And that is buy-in: people's agreement to support something because they have been involved in formulating it.

10 June 2009

Graham Watson, one of the leading lights of the Liberal EU Parliamentary Group responded to the most recent [EU] election results by saying he couldn’t understand why the turnout was so low, and therefore ‘we need to study why people don’t go out and vote’. Sadly, Watson’s lack of understanding of the realities of political life in the EU is not just an act; he is genuinely so out touch with public sentiment that he simply doesn’t get it. Leading EU politicians frequently look upon their electorates as exotic and incomprehensible species whose habits and sensibilities must be ‘studied’. How EU bureaucrats are destroying public life, Frank Furedi, 10 June

It was perhaps inevitable that politicians, as with other professions, would evolve into something like a separate caste from the rest of us. As with airline pilots, we actually want our highly polichymakers to specialise and know exactly what they are doing. The problem is that, unlike airline pilots, our politicians' goals have become quite distinct from, and often in conflict with, those of ordinary people - the public they are supposed to represent. Is 'studying' these people the best way of re-aligning policymakers' goals and visions with those of society?

A better alternative might be to rethink the entire policymaking process. Instead of expressing policy goals in vague terms, or as the product of arcane, stultifying debate about legalisms, funding, or institutional structures, we could instead define policy goals in terms of outcomes that are meaningful to the non-politicians amongst us. Take, for instance, climate change. The psychological connection between cuts in emissions of greenhouse gases and climate stability is a tenuous one, even if the physical relationship turns out to be direct and significant. Legislating for cuts in greenhouse gases is already proving divisive, and threatens our entire climate stabilising project. Much better, in my view, for policymakers to target climate stability itself; a goal with which all of us can identify. Let investors in Climate Stability Bonds work out how best to achieve this goal; responding as only motivated private sector agents can to our rapidly growing knowledge about the causes and effects of climate change.

09 June 2009

...for government, or indeed any single organization, to handle. From 'New Scientist':

The life-cycle emissions generated by cars, buses and aircraft are dominated by tailpipe emissions pumped out in day-to-day running of their engines. Hence, the best way to reduce emissions from these modes of transportation would be to increase fuel efficiency and push for renewable fuels. Crisscrossing the US with a rail network, however, creates a different problem. More than half of the life-cycle emissions from rail come not from the engines' exhausts, but infrastructure development, such as station building and track laying, and providing power to stations, lit parking lots and escalators. Any government considering expanding its rail network should take into account the emissions it will generate in doing so.... Train can be worse for climate than plane, Catherine Brahic, 8 June

Can you imagine any government doing that? And getting it right? And continuing to get it right when new technology or new information about emissions and their effects becomes available? It's not going to happen.

Which is why we need, urgently, an outcome-driven approach. The old way of doing things, with government doing what it thinks is best, might have worked when government was well intentioned and environmental depredations much simpler to identify. It just doesn't work nowadays, when government does what its paymasters want it to do and environmental relationships are much more complex. Government is not up to the job of working out whether climate change is best tackled by subsidising rail, windmills, or catalytic converters. It's not what government is good at, it's not what people go into government to do, and it's not what they are motivated to get right.

What government can do is set up a regime whereby people are rewarded for achieving climate stability, however they do so. In other words, it could contract out the achievement of a more stable climate to a motivated, diverse, adaptive private sector. It could, in summary, issue Climate Stability Bonds.

07 June 2009

George Monbiot, writing about the recent £6.2billion contract to expand the M25 motorway around London, contrasts it with the politicians' expenses scandal in the UK, with its costs to the taxpayer amounting to about one-thousandth that of the road-widening scheme:

The issue is too remote and too complex to ignite public indignation. The scheme’s obscurity has protected it from the outrage now being directed towards [British] MPs. George Monbiot, 'The real expenses scandal', 26 May

What is frightening is how this has now become quite general. Hugely important decisions about the energy, transport, immigration, law and order, are taken almost by default. Public attention, and this is especially noticeable in the UK, settles on images and personality, and on crises only if they have effects that make a dramatic impact when filmed for tv. Slow-moving, complex crises, like climate change or the ballooning of public and private debt, deteriorate over the years, until they manifest themselves unequivocally forms that can be covered in a short news bulletin. There's an inevitability about this, and it's perfectly explicable in a world in which we are bombarded by information. But it is not efficient, because resources are devoted to avoiding images of failure, rather than actual failure. Serious but non-visual crises, as we have seen in finance and the environment, slowly and undramatically gather pace until their effects become unavoidable. By that time, of course, it might be too late to do much about them, even with enormous quantities of spending.

A Social Policy Bond regime could be different. It could target the maintenance of the favourable aspects of the status quo: avoidance of too much climate instability; the absence of nuclear warfare; the prevention, indeed, of any sort of human catastrophe, however caused. The emphasis of much of the media attention in the UK currently is on the personality of the Prime Minister and possible contenders for the leadership of his party. About these matters there is much debate. It is unfortunate, to my mind, that the energy given over to such debate is not devoted to more substantial policy matters. If it were, we could better answer such questions as 'what is "too much" climate stability?', and how shall we best define 'human catastrophe', and take some steps in the direction of solving these and other genuine policy problems. Who would be the best Prime Minister is, to my mind, a distraction. We need, in short, urgently to express our political views in the form of desirable outcomes, rather than in terms of personalities or party politics.

04 June 2009

It's important, I think, that we have some way of monitoring the performance of bodies charged with solving our social and environmental problems. In our large, complex societies, that means we have to use numerical measures and indicators. They all have their weaknesses, but alternatives are, almost by definition, subjective and even less reliable. The Social Policy Bond approach would target broad goals that are meaningful to ordinary people. Its goals would, as far as possible, be inextricably correlated to social or environmental wellbeing. Unfortunately, the use of numerical indicators for targeting purposes is acquiring a bad reputation. Current targets are unsystematic, too narrow, and almost totally uncorrelated with the wellbeing of ordinary people.

Take the well-meaning goal of reducing the waiting time for patients entering the Accident and Emergency wards of UK hospitals to less than four hours. James Bartholomew explains what happens in practice:

1. The ambulance bringing the patient to the hospital is kept waiting outside. The hospital simply declines to accept the patient. This means that the starting time of the four hour wait is delayed and the hospital can claim it is meeting the target.

2. The hospital refuses to accept any emergency patients for a while. The patient has to be transported to a different hospital. This enables the first hospital rightly to claim that patients who get into the hospital are not kept waiting for more than four hours.

Why are the hospitals so keen to meet the target? Because the hospitals receive less money from the government if they fail to meet it.

Who or what suffers? Of course the patient suffers from being kept waiting for emergency treatment for more than four hours. In the second case, the patient may be carried to a hospital that is much further away, delaying treatment. Also people suffer who need an ambulance but cannot get one because ambulances are being kept waiting outside hospitals or taking journeys to hospitals far away. But this suffering is not a direct result of the target. It is a result of inadequate emergency provision in NHS [National Health Service] hospitals. What suffers directly as a result of the target and the cheating on the target is the truth and public awareness of the truth. That, of course, suits the government well. The truth that is kept secret from the voters is the extent to which the massive increase in spending on medical services in Britain has been wasted. We simply do not know the extent because NHS statistics are lies.

02 June 2009

Mick Hume talks about the effect that the expenses scandal is having on UK politics:

What politics have New Labour or Conservative MPs really got to stand on today? Which of them now is really going to offer themselves to the electorate as a party loyalist? In that sense, perhaps the candidates will all be ‘independents’ at the next election, standing on no more than their expenses sheets or promises to be purer than the old gang. ... No, we may not need the old political parties or political class. But we do need politics, and much more of it - political ideas and principles that can contest a fight for the future. I do not support any of the existing parties - or, for that matter, any of the new ones to emerge so far. But I do recall why political parties were formed in the first place: to represent distinctive interests, classes and movements in society, standing on manifestoes that meant something to people. Today we have the empty shells of parties without politics, which have become little more than closed, self-serving patronage and PR machines. We would be better off without them. But to shape the future we are still going to need organised politics of some form, with people standing for collective interests, rather than ragbags of worthy but pointless wandering independents. They're all 'independent' now - but from what?, Mick Hume, 1 June

Here's a suggestion: organise politics around outcomes, rather than personalities, personal probity, or the interests of powerful corporations and bureaucracies. Political debate centres on trivial or arcane details, rather than the broad direction government should take about society and the environment. All too often, these important questions are answered by default; usually by deferring to vested interests. The big decisions are rarely put to the voters. We simply aren't used to consulting people about the outcomes they want, and the priorities they place on them.

But there's no inevitability about continuing along those lines. Policymaking is largely about making trade-offs. It would be no bad thing if we, the people, had to choose between incompatible outcomes. A Social Policy Bond regime, because it costs objectives would give us the information we need to make these choices. Apart from greater efficiency, transparency and stability of policy goals, Social Policy Bonds would therefore bring home to us the realities of decision making. They would make clear that we cannot look to government to solve all our problems, all the time.

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Social Policy Bonds

See the Social Policy Bonds website for overviews and links to articles, papers, news and more about Social Policy Bonds. Click on the image in the panel below to download a 2400-word article published by the Institute of Economic Affairs, London.

Social Policy Bonds in 2400 words

Social Policy Bonds in the media

25 May 2018: a short article on Social Policy Bonds and their possible application in India, appears on Market Express (India). It is by Dr Ashok V Desai and titled Incentivizing welfare.

9 October 2015: An article by Greg Bearup on the genesis of the Social Policy Bond idea, and application of a version of it in Australia appears in the Weekend Australian Magazine. (The article can also be downloaded as a pdf from here.)

October 2013: Professor Robert Shiller of Yale University, is named as one of the three winners of the 2013 Nobel Prize in Economics. His Nobel Prize lecture (pdf) delivered on 8 December, mentions Social Policy Bonds. Professor Shiller has for many years encouraged my work on Social Policy Bonds, beginning in late 1996 when he sent me this letter.

3 May 2012: An audio talk by Nobel Prize winner Professor Robert Shiller at the London School of Economics, in which Social Policy Bonds are briefly mentioned, is available here.